DECLARATION

I undersigned (your name) student of (school name) of

hereby declare that I have completed my project, titled
“GOODS AND SERVICES TAX ACT AND ITS
IMPACT ON GDP”

The information submitted herein is true and original to

the best of my knowledge.

Name

Place

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 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude to my

teacher (Name of the teacher) of (School Name) as well as our
principal (Name of the principal) who gave me the golden
opportunity to do this wonderful project on the topic (Write the
topic name), which also helped me in doing a lot of Research
and I came to know about so many new things I am really
thankful to them .
Secondly I would also like to thank my parents and friends who
helped me a lot in finalizing this project within the limited time
frame.

(YOUR NAME)

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 SUMMARY

GST is an Indirect Tax which has replaced many Indirect

Taxes in India. The Goods and Service Tax Act was
passed in the Parliament on 29th March 2017. The Act
came into effect on 1st July 2017; Goods & Services Tax
Law in India is comprehensive , multi-stage, destination-
based tax that is levied on every value addition.
In simple words, Goods and Service Tax (GST) is an
indirect tax levied on the supply of goods and
services. This law has replaced many indirect tax laws
that previously existed in India.
GST is one indirect tax for the entire country.
So, before Goods and Service Tax, the pattern of tax levy
was as follows:
Under the GST regime, the tax is levied at every point of
sale. In the case of intra-state sales, Central GST and State
GST are charged. Inter-state sales are chargeable to
Integrated GST.
Now let us try to understand the definition of Goods and
Service Tax – “GST is a comprehensive, multi-
stage, destination-based tax that is levied on every value
addition.”
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GOODS AND SERVICES TAX ACT AND ITS
IMPACT ON GDP

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INTRODUCTION
WHAT IS GOODS AND SERVICES?
Goods are items that are usually (but not always) tangible,
such as pens, salt, apples, and hats. Services are activities
provided by other people, who include doctors, lawn care
workers, dentists, barbers, waiters, or online servers, a
book, a digital videogame or a digital movie. Taken
together, it is the production, distribution,
and consumption of goods and services which underpins
all economic activity and trade. According to economic
theory, consumption of goods and services is assumed to
provide utility (satisfaction) to the consumer or end-user,
although businesses also consume goods and services in
the course of producing other goods and service.

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WHAT IS TAX?
A tax (from the Latin taxo) is a compulsory financial
charge or some other type of levy imposed upon a
taxpayer (an individual or other legal entity) by a
governmental organization in order to fund various public
expenditures. A failure to pay, along with evasion of or
resistance to taxation, is punishable by law. Taxes consist
of direct or indirect taxes and may be paid in money or as
its labour equivalent. The first known taxation took place
in Ancient Egypt around 3000–2800 BC.

Most countries have a tax system in place to pay for

public, common or agreed national needs and government
functions. Some levy a flat percentage rate of taxation on
personal annual income, but most scale taxes based on
annual income amounts. Most countries charge a tax on
individuals income as well as on corporate income.
Countries or subunits often also impose wealth

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taxes, inheritance taxes, estate taxes, gift taxes, property
taxes, sales taxes, payroll taxes or tariffs.

In economic terms, taxation transfers wealth from

households or businesses to the government. This has
effects which can both increase and reduce economic
growth and economic welfare. Consequently, taxation is a
highly debated topic.

TAXES SUBSUMED?
The single GST subsumed several taxes and levies which
included: central excise duty, services tax, additional
customs duty, surcharges, state-level value added tax and
Octroi. Other levies which were applicable on inter-state
transportation of goods have also been done away with in
GST regime. GST is levied on all transactions such as
sale, transfer, purchase, barter, lease, or import of goods
and/or services.

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India adopted a dual GST model, meaning that taxation is
administered by both the Union and State Governments.
Transactions made within a single state are levied with
Central GST (CGST) by the Central Government and
State GST (SGST) by the State governments. For inter-
state transactions and imported goods or services, an
Integrated GST (IGST) is levied by the Central
Government. GST is a consumption-based
tax/destination-based tax, therefore, taxes are paid to the
state where the goods or services are consumed not the
state in which they were produced. IGST complicates tax
collection for State Governments by disabling them from
collecting the tax owed to them directly from the Central
Government. Under the previous system, a state would
only have to deal with a single government in order to
collect tax revenue.

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HSN CODE?
HSN is an 8-digit code for identifying the applicable rate
of GST on different products as per CGST rules. If a
company has turnover up to ₹1.5 Crore in the preceding
financial year then they need not mention the HSN code
while supplying goods on invoices. If a company has
turnover more than ₹1.5 Crore but up to ₹5 Cr then they
need to mention the first two digits of HSN code while
supplying goods on invoices. If turnover crosses ₹5 Cr
then they shall mention the first 4 digits of HSN code on
invoices.

RATE?
The GST is imposed at variable rates on variable items.
The rate of GST is 18% for soaps and 28% on washing
detergents. GST on movie tickets is based on slabs, with
18% GST for tickets that cost less than Rs. 100 and 28%
GST on tickets costing more than Rs.100 and 28% on
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commercial vehicle and private and 5% on readymade
clothes. The rate on under-construction property booking
is 12%. Some industries and products were exempted by
the government and remain untaxed under GST, such as
dairy products, products of milling industries, fresh
vegetables & fruits, meat products, and other groceries
and necessities.

Checkposts across the country were abolished ensuring

free and fast movement of goods.

The Central Government had proposed to insulate the

revenues of the States from the impact of GST, with the
expectation that in due course, GST will be levied on
petroleum and petroleum products. The central
government had assured states of compensation for any
revenue loss incurred by them from the date of GST for a
period of five years. However, no concrete laws have yet
been made to support such action. GST council adopted
concept paper discouraging tinkering with rates.

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E-WAY BILL?
An e-Way Bill is an electronic permit for shipping goods
similar to a waybill. It was made mandatory for inter-state
transport of goods from 1 June 2018. It is required to be
generated for every inter-state movement of goods
beyond 10 kilometres (6.2 mi) and the threshold limit
of ₹50,000 (US$720).

It is a paperless, technology solution and critical anti-

evasion tool to check tax leakages and clamping down on
trade that currently happens on a cash basis. The pilot
started on 1 February 2018 but was withdrawn after
glitches in the GST Network. The states are divided into
four zones for rolling out in phases by end of April 2018.

A unique e-Way Bill Number (EBN) is generated either

by the supplier, recipient or the transporter. The EBN can
be a printout, SMS or written on invoice is valid. The
GST/Tax Officers tally the e-Way Bill listed goods with
goods carried with it. The mechanism is aimed at

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plugging loopholes like overloading, understating etc.
Each e-way bill has to be matched with a GST invoice.

WHAT IS GOODS AND SERVICE TAX ACT ?

Goods and Services Tax (GST) is an indirect

tax (or consumption tax) imposed in India on the supply
of goods and services. It is a comprehensive multistage,
destination based tax. Comprehensive because it has
subsumed almost all the indirect taxes except few. Multi-
Staged as it is imposed at every step in the production
process, but is meant to be refunded to all parties in the
various stages of production other than the final
consumer. And destination based tax, as it is collected
from point of consumption and not point of origin like
previous taxes.

Goods and services are divided into five different tax

slabs for collection of tax - 0%, 5%, 12%, 18% and 28%.
However, petroleum products, alcoholic drinks,
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and electricity are not taxed under GST and instead are
taxed separately by the individual state governments, as
per the previous tax regime. There is a special rate of
0.25% on rough precious and semi-precious stones and
3% on gold. In addition a cess of 22% or other rates on
top of 28% GST applies on few items like aerated
drinks, luxury cars and tobacco products. Pre-GST, the
statutory tax rate for most goods was about 26.5%, Post-
GST, most goods are expected to be in the 18% tax range.

The tax came into effect from July 1, 2017 through the
implementation of One Hundred and First Amendment of
the Constitution of India by the Indian government. The
tax replaced existing multiple flowing taxes levied by
the central and state governments.

The tax rates, rules and regulations are governed by the

GST Council which consists of the finance ministers
of centre and all the states. GST is meant to replace a slew
of indirect taxes with a federated tax and is therefore

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expected to reshape the country's 2.4 trillion dollar
economy, but not without criticism. Trucks' travel time in
interstate movement dropped by 20%, because of no
interstate check posts.

GOODS AND SERVICES TAX NETWORK

(GSTN)

The GSTN software is developed by Infosys

Technologies and the Information Technology network
that provides the computing resources is maintained by
the NIC. "Goods and Services Tax" Network (GSTN) is a
nonprofit organisation formed for creating a sophisticated
network, accessible to stakeholders, government and
taxpayers to access information from a single source
(portal). The portal is accessible to the Tax authorities for
tracking down every transaction, while taxpayers have the
ability of connect for their tax returns.

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The GSTN's authorised capital is ₹10
crore (US$1.4 million) in which initially the Central
Government held 24.5 percent of shares while the state
government held 24.5 percent. The remaining 51 percent
were held by non-Government financial
institutions, HDFC and HDFC Bank hold 20%, ICICI
Bank holds 10%, NSE Strategic Investment holds 10%
and LIC Housing Finance holds 11% .

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HISTORY
 FORMATION

The reform of India's indirect tax regime was started in

1986 by Vishwanath Pratap Singh, Finance Minister
in Rajiv Gandhi’s government, with the introduction of
the Modified Value Added Tax (MODVAT).
Subsequently, Prime Minister P V Narasimha Rao and his
Finance Minister Manmohan Singh, initiated early
discussions on a Value Added Tax (VAT) at the state
level. A single common "Goods and Services Tax (GST)"
was proposed and given a go-ahead in 1999 during a
meeting between the Prime Minister Atal Bihari
Vajpayee and his economic advisory panel, which
included t0hree former RBI governors IG Patel, Bimal
Jalan and C Rangarajan. Vajpayee set up a committee
headed by the Finance Minister of West Bengal, Asim
Dasgupta to design a GST model.

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The Ravi Dasgupta committee which was also tasked with
putting in place the back-end technology and logistics
(later came to be known as the GST Network, or GSTN,
in 2015). It later came out for rolling out a uniform
taxation regime in the country. In 2002, the Vajpayee
government formed a task force under Vijay Kelkar to
recommend tax reforms. In 2005, the Kelkar committee
recommended rolling out GST as suggested by the 12th
Finance Commission.

After the defeat of the BJP-led NDA government in

the 2004 Lok Sabha election and the election of a
Congress-led UPA government, the new Finance
Minister P Chidambaram in February 2006 continued
work on the same and proposed a GST rollout by 1 April
2010. However, in 2011, with the Trinamool
Congress routing CPI(M) out of power in West Bengal,
Asim Dasgupta resigned as the head of the GST

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committee. Dasgupta admitted in an interview that 80%
of the task had been done.

In the 2014 Lok Sabha election, the Bharatiya Janata

Party-led NDA government was elected into power. With
the consequential dissolution of the 15th Lok Sabha, the
GST Bill – approved by the standing committee for
reintroduction – lapsed. Seven months after the formation
of the then Modi government, the new Finance
Minister Arun Jaitley introduced the GST Bill in the Lok
Sabha, where the BJP had a majority. In February 2015,
Jaitley set another deadline of 1 April 2017 to implement
GST. In May 2016, the Lok Sabha passed the
Constitution Amendment Bill, paving way for GST.
However, the Opposition, led by the Congress, demanded
that the GST Bill be again sent back for review to the
Select Committee of the Rajya Sabha due to
disagreements on several statements in the Bill relating to
taxation. Finally in August 2016, the Amendment Bill

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was passed. Over the next 15 to 20 days, 18 states ratified
the Constitution amendment Bill and the President Pranab
Mukherjee gave his assent to it.

A 21-member selected committee was formed to look into

the proposed GST laws. After GST Council approved the
Central Goods and Services Tax Bill 2017 (The CGST
Bill), the Integrated Goods and Services Tax Bill 2017
(The IGST Bill), the Union Territory Goods and Services
Tax Bill 2017 (The UTGST Bill), the Goods and Services
Tax (Compensation to the States) Bill 2017 (The
Compensation Bill), these Bills were passed by the Lok
Sabha on 29 March 2017. The Rajya Sabha passed these
Bills on 6 April 2017 and were then enacted as Acts on 12
April 2017. Thereafter, State Legislatures of different
States have passed respective State Goods and Services
Tax Bills. After the enactment of various GST laws,
Goods and Services Tax was launched all over India with
effect from 1 July 2017. The Jammu and Kashmir state

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legislature passed its GST act on 7 July 2017, thereby
ensuring that the entire nation is brought under an unified
indirect taxation system. There was to be no GST on the
sale and purchase of securities. That continues to be
governed by Securities Transaction Tax (STT).

 LAUNCH
The GST was launched at midnight on 1 July 2017 by the
President of India, and the Government of India. The
launch was marked by a historic midnight (30 June – 1
July) session of both the houses of parliament convened at
the Central Hall of the Parliament. Though the session
was attended by high-profile guests from the business and
the entertainment industry including Ratan Tata, it was
boycotted by the opposition due to the predicted problems
that it was bound to lead for the middle and lower class
Indians. It is one of the few midnight sessions that have
been held by the parliament - the others being
the declaration of India's independence on 15 August

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1947, and the silver and golden jubilees of that
occasion. After its launch, the GST rates have been
modified multiple times, the latest being on 22 December
2018, where a panel of federal and state finance ministers
decided to revise GST rates on 28 goods and 53 services.

Members of the Congress boycotted the GST launch

altogether.

They were joined by members of the Trinamool

Congress, Communist Parties of India and the DMK. The
parties reported that they found virtually no difference
between the GST and the existing taxation system,
claiming that the government was trying to merely
rebrand the current taxation system. They also argued that
the GST would increase existing rates on common daily
goods while reducing rates on luxury items, and affect
many Indians adversely, especially the middle, lower
middle and poorer income groups.

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STATISTICS
COLLECTIONS

RETURNS

Around 38 lakh new taxpayers have registered under GST regime and the total count has crossed one crore if we include
the 64 lakh earlier ones. Total number of taxpayers were above 1.14 crore in October 2018.

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POSITIVE AND NEGATIVE IMPACT OF GST
ON GDP.

POSITIVE IMPACT OF GST:

1. Increase in Foreign Investment- With GST, India is
now a unified market and the foreign investment has
increased in India. The goods that are manufactured
within India because of their reduced costs have
become more competitive in international market
leading to growth in export. The implementation of
Goods & Services tax puts India in the line of
international tax standards, making it easier for
Indian businesses to sell in the global market.

2. Fewer Tax- GST has two constituents: The central

GST and the State GST. The Central GST will
replace - Service Tax, Central Excise Duty, and
Custom Duty etc. The State GST will replace - State
VAT, Central Sales Tax, Tax on Advertisements,
Luxury Tax, Purchase Tax, Entertainment Tax etc.
Before GST, there were so many taxes and now they
have replaced all these taxes and duties with Central
GST and State GST.

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3. Reduce the cost of doing business- GST has
changed VAT all over India. Now we do not need to
pay different amounts of taxes in different states. It is
one tax system for all states of India and so we have
already got rid of various taxes and duties on our
businesses.

4. Transparency- The tax administration has started

working corruption free. Also enabling sales invoices
to show the tax applied has resulted in transparency.

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NEGATIVE IMPACT OF GST:
1. Dual Control - GST is being referred to as a single
taxation system but in reality it is a dual tax because
both the state and centre both will collect separate tax
on a single transaction of sale and service.

2. Incumbent increase of the cost of some

commodities - The tax rate has been increased for
many products, thus increasing their costs.

3. Some sector are at a loss- Sectors like Textile,

Media, Pharma, Dairy Products, IT and Telecom are
bearing the brunt of a higher tax. Also the price of
commodities has increased like jewellery, mobile
phones and credit cards.

4. Real Estate Market affected - Economists are of the

opinion that GST in India has already had a negative
impact on the real estate market. It has added up to 8
percent to the cost of new homes and reduced
demand by about 12 percent.

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 CONCLUSION

Nowadays there are so many things heard about GST,

little right and many wrong. GST, is like a book which
has been hardly read but everybody is giving opinion
about it.
Here, i will try to explain the GST in the most unusual,
simple and interesting way.
For a common man GST stands for ' Goods and Services
Tax", and is proposed to be a comprehensive indirect tax
levied on manufacturing, sale and consumption of goods
as well as services at the national level. It will replace all
other indirect taxes levied on goods and services by the
Indian Central and State governments.
One of the main objective of Goods & Service Tax(GST)
would be to eliminate the doubly taxation i.e. cascading
effects of taxes on production and distribution cost of
goods and services. The exclusion of cascading effects i.e.
tax on tax till the level of final consumers will
significantly improve the competitiveness of original
goods and services in market which leads to beneficial
impact to the GDP growth of the country. Introduction of
a GST to replace the existing multiple tax structures of
Center and State taxes is not only desirable but
imperative. Integration of various taxes into a GST
system would make it possible to give full credit for

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inputs taxes collected. GST, being a destination-based
consumption tax based on VAT principle.
GST will simplify India of its complex and complicated
indirect tax structure and will ensure a single unified tax
regime, which will be reshaping India’s indirect tax
structure.

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